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Lost Your Job? Here's How To Withdraw Your PF And Avoid The Tax Trap
NDTV Profit 8 hrs ago·11 Nov 2026, 9:18 am
If you have lost your job, you might be considering withdrawing your entire Provident Fund (PF) balance. However, this is not always the best financial move. The Employee Provident Fund (EPF) is a long-term retirement savings scheme that offers tax-free interest and a lump sum upon retirement. Withdrawing it early can disrupt your retirement corpus and may lead to a tax liability if the amount exceeds the tax-free limit.
For investors, the key is to understand the withdrawal rules. You can withdraw up to 75% of your PF balance without paying tax, provided you have been employed for at least five years. To get the remaining 25% tax-free, you must have been unemployed for at least two months. This strategy allows you to access some liquidity during a job loss while preserving the bulk of your savings for the future.
Moving forward, monitor the tax implications of your withdrawal. If you withdraw more than the tax-free limit, the excess will be taxed as per your income slab. Additionally, keep an eye on your employment status. If you secure a new job within five years of your previous exit, you can transfer your PF balance to the new employer's account, ensuring your savings continue to grow without tax deductions.
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